As you drive to work, your car’s satellite navigation system changes directions to instruct you to take a detour: a traffic jam has sprung up on your usual route and the cars stuck in it have instantaneously sent status updates to the rest of the GPS systems in the city warning them to avoid it.

While on your alternative route, sensors inside the wheel detect that a tyre is wearing out. The car cross-references with your diary and books an appointment to have it replaced.

As you approach work, the car communicates with the local parking bays to find and book the closest one to your door, saving you the time you would have previously spent searching for a spot.

This scenario would have sounded like science fiction a few years ago but the reality of a hyper-connected world, with thousands of everyday items talking to one another over the internet, is beginning to happen.

According to Cisco, the Silicon Valley networking giant, it is a phenomenon that could add hundreds of billions of pounds to the British economy. What Cisco calls the “internet of everything” – connections between almost everything, rather than just computers – could bring about a revolution as significant as the web itself.

“Less than 1pc of what can be connected to the internet is connected,” says Phil Smith, the chief executive of Cisco UK.

Cisco estimates that the gains generated by the internet of everything could be worth $14 trillion (£8.3 trillion) to the global economy. “If you imagine the effect that the internet has had now and then you connect another 99 times or more, amazing things can happen,” Mr Smith says.

The idea of a connected world, with every household object talking to each other in a common language, is almost as old as the internet itself but prototypes and start-ups have often become at best an expensive niche and at worst a complete failure.

However, the arrival of the smartphone, which brought internet access away from the computer, has laid the groundwork for thousands of other items to be connected. The microchips and wireless radios that used to cost several pounds now costs pennies and the demand for faster mobile internet has driven the arrival of 4G mobile networks and public WiFi networks.

Technology giants are now putting their weight behind the vision of a connected world.

Earlier this year, Google spent $3.2bn acquiring Nest, a company that makes thermostats and smoke alarms which communicate with each other and with the owner’s smartphone.

Car manufacturers are putting millions of lines of code in their internet-connected computer systems.

ARM Holdings and Imagination Technologies, two of the UK’s biggest semiconductor designers, whose chips are used in many of the world’s best-selling smartphones and tablets, are investing heavily in high-volume, low cost microchips. They say internet-connected machines could well become bigger business than smartphones.

“With all technology-driven change, it clearly takes time for the tech to become mass affordable, reliable and robust,” says Mr Smith. “[The internet of everything] was very much a niche but the reality now is that almost every appliance you get will have some kind of network connectivity.”

Cisco, together with researchers at University College London, has established a centre for developing the technology at a base in Greenwich, a stone’s throw from London’s O2.

Mr Smith says the development of London’s technology industry, together with government support for start-ups, encouraged Cisco to develop its technology here. He predicts that Britain is going to benefit massively from driving the connected world.

“The UK market’s a very significant part of [the internet of everything] economy, it tends to take the lead in these kind of things and a number of the economic benefits are going to be gained by the people that are on the front foot,” Mr Smith says.

Cisco has identified five industries that it says are likely to see immediate benefits: healthcare, in which scanners and sensors will be able to monitor, store and process vast quantities of patient data; retail, with stores using customer information to target products directly at shoppers; transport, as location services and real-time data produce quicker journeys; energy, since smarter use of power will mean households and businesses becoming far more efficient; and manufacturing, with sensors being built into equipment making them much more reliable and cheaper to maintain.

“[Britain] has some of the highest technology manufacturing in the world,” says Mr Smith. “If we can bring more back to the UK and use [some of these techniques] to enhance it, there are lots of opportunities for re-shoring, potentially reclaiming manufacturing.”

Cisco and many other technology companies envisage a world in which every household object, machine and system is constantly gathering, reading and sending data back and forth.

To achieve the trillions of pounds worth of efficiencies, time savings and greater productivity that are being promised, people, corporations and governments may have to become far more open to the idea of having their activity catalogued by thousands of sensors every day.

The idea that your thermostat or lighting system knows when you are away from home is not likely to be welcomed by everyone, especially if the data can be hacked, or sold to sell adverts.

Mr Smith admits that “things like privacy and data openness will have to be addressed” but insists the focus is on encouraging companies and public bodies to release data and that individuals are unlikely to be forced to give up their data without consent.

Cisco, among others, is in discussions with the Government over the standards that will have to come into place to protect people. It is confident that once privacy concerns are overcome, the applications for the internet of everything are potentially limitless.

“You couldn’t have dreamed up Amazon or eBay before you had the internet but, once you’ve got a platform, then innovation starts to happen,” says Mr Smith.

“This is going to give us capabilities that we’ve just never had before.”